Which of the following is an external cause of depreciation?
Correct answer: B. Obsolescence
- A. Routine repair and maintenance
- B. Obsolescence
- C. Misuse
- D. Wear and tear
Explanation
Obsolescence is an external cause because technological change, fashion, or market developments can make an asset outdated even when it remains physically usable. Wear and tear and misuse arise from the asset’s use or condition.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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